HALO Talks Fast Break: Navigating Franchise Growth-Greenfields, Acquisitions, and Scaling Fitness Brands with Private Equity

In today's Fast Break we're excited to bring you (a snippet) of our panel discussion at the recent Athletech Innovators Summit held in NYC, July 2025. Integrity Square Founder and HALO Talks host Pete Moore moderated a panel with Mark Federico (CEO of Fitness Holdings/Crunch Fitness) and Terry Blachek (Orange Theory Fitness) for a deep dive into the real-world challenges—and strategies—of scaling fitness franchises.

Mark Federico’s Growth Playbook

• Mark walked us through his journey, from running a nine-club independent brand to leading a 50+ club Crunch Fitness operation across 10 states.
• He shed light on the big question: Build new locations (greenfields) or buy existing ones (acquisitions)? He shared the calculus behind each approach, breaking down real cost factors and explaining why “development space” is critical for franchisees.

Franchise Valuation—Not All Clubs Are Created Equal

• Many single-gym owners want “big company” multiples, but Mark explained why scale, growth runway, and strategic value make a huge difference in valuation.
• Pro tip: Buying a single club isn’t the same as absorbing a whole region. If you want premium pricing, bring growth potential to the table.

Financing Franchise Expansion

• Terry opened up about the risks and strategies he used to finance Orange Theory locations, including SBA loans, finding investor partners, and personally guaranteeing leases.
• They discussed what it really takes to stand behind a business—sometimes with tens of millions in personal guarantees—long before private equity gets involved.

The Realities (and Rewards) of Entrepreneurship

• Both guests emphasized the massive personal and financial risks entrepreneurs take to build these fitness empires. Pete made an important point: These risks deserve respect and reward, not scorn.

Bonus Insight: The "Microwave vs. Crockpot" Growth Model

• Terry shared Orange Theory’s approach to expansion, balancing rapid growth with careful, sustainable development. If you're a franchisor or area developer, this is a must-hear perspective.

Want to learn more? (You should. Otherwise you're playing checkers while the rest of the industry plays chess.) 

Give us 10 hours of your time at the next HALO Academy starting Sept 8, 2025. Register at https://www.thehaloacademy.com now for $495 and earn a $100 gift card from our friends at Promotion Vault.  Testimonials at https://www.thehaloacademy.com/testimonials 

==================================================

Thanks to Promotion Vault and HigherDose for sponsoring. For 15% off products sitewide (excluding bundles, kits, and full saunas) use the code GOHALO at https://www.higherdose.com

Resources 

• Athletech News: https://athletechnews.com
• Mark Federico: https://www.linkedin.com/in/mark-federico-163069182
• Terry Blachek: https://www.linkedin.com/in/terry-blachek-78431a174
• Orange Theory Fitness: https://www.orangetheory.com
• Crunch Fitness: https://www.crunchfitness.com 

Episode Transcript

(00:00):
So Mark, maybe take a couple of minutes and explain to everybody
when you started with the Crunch what you built and then
how do you think about greenfields versus acquisitions as you build out the platform with
your private equity partner? Sure. So I joined Crunch
fitness back in 2018. Prior to that I owned a small independent
brand. We had about nine clubs, which I had only sold two Fitness

(00:23):
holdings at the time. Fitness holdings had about eight clubs.
They were one of the early fitness franchise groups within the
Crunch system. And so I kind of looked at it coming
from the northeast, dealing with Planet Fitness. Crunch
started to make their ways blink. Fitness was making their waves and as an independent
operator I just said, you know what, I think I better join them than keep

(00:45):
trying to fight them. And so I ended up ultimately sold
to Fitness holdings and joined Crunch. And at the time I looked at it as
maybe a one or two year old rest invest
period. You know, as we migrated from our
train into the, the Crunch ecosystem. Fast forward
2020 comes along, Covid strikes and our

(01:08):
PE firm decided they wanted to make some changes with the management team
and ultimately I became the CEO and you know, back,
you know, took over probably in 21. And we had probably about
20 to 22 clubs at that time. And obviously since that time you can
see our territory, we've grown. We currently have about 52
locations, we're in 10 states and our

(01:30):
goal is to really grow from the 50 that we're at today to
100, 150 with the development rates that we have growing
from Tennessee all the way up to Maine, Vermont.
So I'm going to go back two slides here and let's take a look at
this. A lot of the Crunch logos that are in the top left hand corner
are all ARI developers. So the way an area developer agreement works

(01:52):
for everyone's knowledge here in Crunch is you get a territory,
you pay a fee to own the exclusive rights to that territory
and you can't sub franchise it. You actually have to build and hit milestones
on your own in order to keep that exclusivity. So
Mark, when you take a look at trying to potentially do acquisitions and
you and I have done a couple and somebody knows, hey, I heard that the

(02:15):
Crunch area developers are trading at 9 to 11
times EBITDA. I've got one club in South Jersey. How about you
pay me 9 to 11 times my club level EBITDA? Yeah, we get that
a lot. Especially when we do like roll ups of other, you know, smaller Crunch
clubs. And, and I think, you know, ultimately it
comes down to having a real conversation. And you know, and I like to

(02:37):
say is that, hey, we're not the same. I know we both have crunches and
you see some of these crunches that are trading at 10x.
But you know, you're a single operator, you have one club, you don't have a
lot of development space. I think development space is key, especially in the
franchise system in terms of how much can you grow. And you
know, ultimately it's a, sometimes a tough conversation to say, hey, look, you know, we're

(02:59):
a hundred million dollar company, $20 million of profit, we have room to grow to
150 locations, you're a single club or two
clubs, you don't really have a lot of Runway.
We're not the same. But again, this is a good return on your investment.
And so when we're looking at, I mean, one of the big discussion points that
we have, obviously when we're looking at an acquisition is strategic.

(03:21):
What does this mean and do we want to go into this market and what
does that open up to us? Right. Obviously the ability to take a
competitor out of our space is huge. Right. I mean, at the end of the
day, we all think we're going to open this brand new shiny club and everyone's
going to migrate from this gym to our gym. But the reality is that's not
always the case. And so, you know, the ability to take a

(03:43):
competitor out is definitely something that goes into the equation.
But yeah, you also have kind of the build versus buy, you know,
so you have to do that math and say, all right, if I'm going to
buy this club and it's going to cost me 2 million to buy the club.
And then you know, obviously as a, as a franchise, we have
branding that we need to do. We have to, you know, certain things that we'll

(04:03):
have to rebrand. New signage, new equipment, new amenities,
all of that stuff. So if I look at that and I say, well, it's
going to cost me another 2 million to rebrand it. Now I'm at 4 million.
Well, heck, I could go build a brand new club for two and a half
million. And so, you know, that definitely becomes that calculus of
build versus buy that you have to take into effect. So one of the things

(04:25):
I did was how do you finance a deal, right? So if you
take a look, it's a million dollars, say it's a million dollars to open up
a store for Orange Theory Fitness. How do you finance that
if you don't have a million dollars? Right. So certainly SBA loans were
a piece of that if I didn't have the rest of the cash, I would
go out and find a partner or two partners to put some cash in.

(04:46):
And remember that what I brought to the table was the expertise. So I had
to put a little bit of cash in. They had to put more cash in.
But I brought the expertise to the table. And then I would typically sign
a guarantee for the lease and I personally then would
guarantee the equipment lease. Right. And so that's how I would
finance. Then we would get some ti money back of course from the landlord, but

(05:07):
that's how I would finance. But I, I mean I was on the line until
we did the private equity deal. Pete. I personally was on the line for,
you know, 15, 20 locations with 10 year leases. I mean it was a lot.
Do the math. So people know $20 million? Yeah, I mean it's,
it was every bit of that. I mean I, yeah, I mean, yeah,
our leases will be anywhere from, you know, 30, 30 to

(05:29):
50,000amonth and you have a 10 year loan. So each new
location might be, you know, 3 to 5 million dollars.
Yeah, so. So as you add up and being an entrepreneur and then
when, you know, I hear certain people saying like we should tax more, you know,
small businesses or we should go after people that make money. The amount of risk
that's taken to build a business is so extreme to create the jobs that

(05:51):
are being created that it should be rewarded at the end and not
vilified. The one thing I want to talk about related to
Orange Theory, when you, I used to ask you on your, when we
did a deal with, with Clearlight, you had a saying of, they said,
hey, how fast can you grow? And you gave your, your, your, your
microwave crock pot. If you could kind of talk about that quote, which I love.

(06:14):
Yes, I, I think, you know, when you talk about. One of the things we
were talking about also is, and I think there was a earlier conversation of
how many stores do you own versus in our model, the franchise model is the
franchisor, an area developer and a franchisee. As an area developer,
we have the option to sell or sell additional.
We call them sub Zs or sub franchises within a given market

(06:35):
territory. So what's the ratio? If you look at that up there,
you probably see about 133 locations that were under my
umbrella. I owned about 50% of those. But that wasn't originally the
goal. Their goal was to actually own about 2/3 of them. And then all of
a sudden what happened is from 2015 through 2019, there was
this frenzy going on around Orange Theory Fitness, and everybody was

(06:57):
bombarding me.